How to Write a Cheque

26 April 2019
by
National Bank

Even if the use of cheques has declined in the last decade, it
hasn’t gone away entirely: Canadians wrote over 550 million cheques
in 2017, according to Payments Canada.

There was a 41% decrease in the number of cheques in circulation in
Canada between 2008 and 2016, according to a report by Payments Canada published in 2017.
However, for large amounts, cheques are still the preferred method of payment.

People still prefer cheques for business-to-business transactions and
to pay sums owed to the government (income taxes, land value tax,
etc.). “Rent and daycare are still often paid for by
cheque,” adds Ginette Bouillon, Head of Financial Program Products at
National Bank.

How to write a cheque

A cheque must be filled out correctly for it to be valid. Use a pen
with blue or black ink for better legibility. Here are the details for
each piece of information that must be included on a cheque.

1. Write the date

A cheque is valid for six months. After that, it normally can’t be
cashed. Be vigilant at the start of a new year: “That’s when you often
see cheques dated with the previous year. If more than six months have
elapsed from the date on the cheque, it won’t be accepted,” warns Bouillon.

As for postdated cheques, although it’s helpful to write a future
date on a cheque, sometimes the cheque can still get cashed before the
indicated date. Banks handle a large volume of cheques and some could
slip through the cracks. If you’ve been charged an insufficient funds
fee because of this, ask your bank to reimburse you. The cheque can
also be returned, with the amount credited back to your account until
the date written on the cheque.

2. Indicate the beneficiary

Never sign a cheque without having written the beneficiary’s name.
That way, in case of loss or theft, the person who finds the cheque
can’t just write their name on it and cash it.

Don't look any further

3. Indicate the amount

First, write the amount in numbers, separating the dollars from the
cents using a period. Draw a horizontal line before the first digit in
the dollar amount to ensure that the number cannot be increased. Then,
write the dollar amount in letters. The cent total can be written in numbers.

If you don’t have enough money in your account to cover the indicated
amount, you will be charged a not sufficient funds fee (NSF). At
National Bank, this fee totals $45.

On the other hand, if you try to cash a cheque that has insufficient
funds, then you won’t have access to the requested amount. If your
bank gave you immediate access, the amount will be subtracted from
your account balance. This could lead to an overdraft, in which case
you will be charged interest.

4. Think about the description

You don’t have to fill out the description section at the bottom of
the cheque, but you could write down, for example, the number of the
invoice you’re paying. “If there’s a dispute regarding payment, this
could be used as proof,” explains Bouillon.

5. Sign it

A cheque can’t be cashed without a legible signature. Your signature
must be identical to the one you provided when you opened your
account. If there are any doubts, the bank could proceed with verifications.

Make sure you keep your cheques in a safe place and, to avoid any
risk of fraud, do not sign any cheques without filling them out first.

Is there a hold on funds when depositing a cheque?

When depositing cheques worth $100 or less, the money is usually
available right away. Over $100, the beneficiary has access to the
first $100, but the rest could be on hold for 4 to 8 business days.
This applies to cheques deposited in person with a teller, at an ATM
or with your mobile device.

This delay allows the bank to ensure that the emitter of the cheque
has enough funds in their account to cover the amount indicated on the
cheque. To do so, the bank often has to contact another financial
institution to carry out verifications.

However, banks don’t always put holds on the money. Customers who
have a good relationship with their bank can often withdraw the entire
amount right after depositing the cheque.

Since it costs more to process and is less safe than electronic
transfers or Interac transfers, for example, cheque payments may very
well disappear within the next few years. Until then, make sure you
know how to write a cheque!

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